A week ago, Mario Draghi, the head of the ECB was in London giving a speech. During that speech, he heaped support on the Euro project and actions in the pipeline to support it. It was not a case of doing something, but whatever was done would result in the end of the Euro crisis and there was no need to short the Euro any more. Wow.
A week later, the ECB held its monthly meeting and was widely expected to do something. No-one knew what exactly, but it had to do something. The speech of last week caused a huge rally in the value of the Euro and a significant easing in the interest rates paid by Spain and Italy.
Come the hour, it was a case of light the blue touch paper and retire to the sidelines to watch the display. We waited a long time and still nothing except talk. The inevitable damp squib followed.
If talk of action moves the market one way, lack of action can just as easily move it the other way. That is precisely what happened next. The Euro fell, interest rates rose, stock markets sold off. It was another example of why the Euro crisis persists. Everyone knows that something needs to be done. But no-one is actually doing it.
Yesterday’s conference by the ECB had much in common with the British summer this year. It promised so much, we all had high hopes. The reality is pretty miserable and it never seems to change. At least we can congratulate our Olympians who put in a fantastic performance yesterday.